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HR TRANSFORMATION
The New Disrupted World of Work: Seven Practices For High-Impact HR

The world of work has been disrupted in ways I’ve never seen. We’re working many more hours (we’ve lost an entire week of vacation time since 2000), we feel overwhelmed (40% of US workers believe their work is “highly stressful”), and more and more people are taking on gig-work and alternative work arrangements. And everywhere, we are re-inventing our skills and ourselves to cope with the rise of labor-saving technology and software, including Artificial Intelligence. (Read the article “Catch the Wave, 21st Century Careers” for more on this.)

What is HR’s new role in all this change and how can HR add the most value? Our latest research, “High-Impact HR”, helps explain what HR should be doing about all this.

What Is Happening to HR?

HR professionals can play a role in responding to this disruption, even though it’s not easy. In many ways HR is a “no-win” profession: when things go well management takes the credit, and when things go poorly, HR is often blamed.

Consider all that today’s global HR function is expected to do: train managers, address diversity problems, find and hire talented people as fast as possible, train better employees, on-board and transition people smoothly, pay people competitively, arrange great benefits and perks, and build a work environment that is rewarding, enjoyable, and inspiring. And through it all, HR is also expected to maintain accurate records, make sure the global payroll works efficiently, and keep the company out of legal and compliance problems in hundreds of countries around the world.

This is not an easy job… but it may be easier by seeing the HR function as having two essential tasks: Doing the “hard things” and the “soft things.”

The Hard Things are the “transactional” issues at work: getting people screened and hired, posting job descriptions, building a career portal, running the payroll, making sure compliance training is done, getting people to do appraisals, and handling employee grievances, safety issues, and terminations. These processes, including things like benefits administration, onboarding, alumni management, and employee communications, are very complicated – but people tend to get very upset if they aren’t done well every single time. 

The Soft Things are the “people-centric” challenges at work: making sure performance management is done in a positive way, training new managers to be effective, building a leadership and executive pipeline, assessing and strengthening culture and engagement, understanding turnover and productivity, and diagnosing complex issues like theft, harassment, lack of diversity, collaboration, innovation, and employment brand. While HR can be creative and consultative in addressing these “soft issues,” they tend to be squeezed into available time and budget, while the “hard stuff” gets done first.

 

HR Teams Still Spend Too Much Time on Transactional Work

Whether we like it or not, HR teams spend a lot of time on transactional work. Our new research shows that 41% of HR professionals’ time is spent on “transactional activities,” 40% on “talent and people,” and 19% on “workplace and work.” HR teams are trying hard to fix this: respondents told us they plan to reduce the transactional work (moving from 41% to 30% over the next 3 years) in an effort to focus on people, culture, and the workplace.

As you look at the maturity model below you’ll see a clear trend: the more time you spend on non-transactional work, the more impact HR will have. Level 4 companies spend only 29% of their overall time on transactional work, while level 1 companies are spending 58%! So if you find yourself spending most of your day running reports and dealing with payroll, you’re not automating HR sufficiently.

 

Today The Soft Things Matter More

Today our research shows that the Soft Things matter more than ever. Here’s why: People-centric issues drive value. Research by the Bureau of Labor Statistics shows that almost 90% of US stock market value is now driven by intellectual property, services, and brand[1] – all of which are “people-driven” issues. It appears that regardless of the business you are in, “people are your product.”

[1] Source: Bureau of Labor Statistics.”

In addition, the “soft issues” are at the heart of some major economic challenges. The productivity of the workforce has not been going up. The current digital revolution is actually the least productive revolution we have seen in U.S. economic history (the invention of the steam engine, electricity, and the original computer drove more output per hour of work). So the pressure is on: How can HR focus on the “soft issues” to help people get more done at work?

 

We Did the Research: What Effective HR Looks LIke

After nearly two years surveying more than 1,000 organizations, studying nearly 100 talent and HR practices, and evaluating lots of data about how companies evaluate HR for its impact on profitability, revenue growth, and other financial metrics, we can say what leading companies do. Truly effective HR organizations today are taking on a whole new identity. They are still doing the “hard things” well, but they are using automation and streamlining these “must do” activities so they can focus on design, culture, values, leadership, and productivity – the people-centric outcomes from addressing the “soft things.”

This is a transformation we call “High-Impact HR,” and it represents a manifesto for the HR department. But it doesn’t only apply to HR. High-Impact HR gives us insights into being a better manager, running IT and other business functions effectively, and focusing your entire business. We found seven key practices that differentiate these high performing companies.

 

The Seven Key Findings

  1. Design employee experiences by segmenting and understanding the work lives of your people. Design thinking takes into account how people already work, make decisions and otherwise organize their day and effort – and uses that knowledge to build specific HR-driven tools to help employees meet goals, improve skills, collaborate and feel more engaged.
  2. Use HR technology to help improve people’s productivity and experience at work. HR-driven technology has the potential to do much more than automate existing practices. High-impact HR organizations find opportunities to use technology to improve productivity, feedback, and alignment among teams throughout the company.
  3. Lead the company’s digital transformation. As many companies struggle to understand what the digital revolution means for their businesses, HR is uniquely specifically positioned to lead rather than follow. Organizational structure, reward systems and incentives – all under the purview of HR – are critical pieces for businesses in reaching the digital future.
  4. Understand and support agile and team-centric organizational models. Traditional hierarchies no longer represent the way that most work really gets done. High-impact HR organizations offer collaborative solutions to help constantly shifting team structures with issues such as goal management, performance management, coaching, check-ins, and development.
  5. Work with leadership to shape a culture of trust, inclusion, purpose, and accountability. High-impact HR organizations don’t just focus on compliance and control – the “hard issues.” By focusing on culture, high-performance HR teams are able to address multiple entry points for “soft issues”.
  6. Design the HR function to operate as a network of teams, breaking down silos within the HR function and with the rest of the business. While specialization in issues like recruiting, learning, compensation and other key functions is important, almost all problems today are multi-disciplinary. High-impact HR teams operate as agile consulting groups, bringing together all the disciplines into action when a problem emerges.
  7. Regenerate, professionalize, and continuously develop your HR professionals. HR should never be a place to “throw people” who can’t perform in other parts of the business. Demand the same level of growth and innovation as you would from other functions of the business and give your people lots of opportunities for developmental assignments, external education, research, and visits to peer companies. 

 

Where Do You Stand?

These seven findings are inspiring to think about – but how do we get there from here? What specifically can HR departments do to address this “disrupted work” world we operate in today? And how far are you from “high-impact?”

Let me show you our new maturity model. After analyzing data from more than 1,000 organizations, we correlated and grouped the practices into four categories, and found the aggregate looks like this:

 

In Today’s Disrupted World of Work: HR Matters More Than Ever

The examples of HR organizations that climb the ladder to deliver high-impact results are often inspiring and educational. And what’s more, they demonstrate something I’ve seen throughout my career: The companies that march up this ladder and focus on achieving the seven common outcomes of effective HR organizations are simply better-run companies overall. They tend to be more profitable, grow faster, and have higher levels of employee engagement. We carefully analyzed these companies, and the results are clear.

 

The research has lots of detail, but let me conclude with a simple message. Today’s “disrupted world of work” demands leadership, creativity, and passion from HR. The days of HR teams wishing for a “seat at the table” are over: you’ve been given the opportunity to lead. High-Impact HR professionals should lead a crusade to make the work experience productive, engaging, and rewarding. Business leaders will be thrilled.

I know that HR professionals are up to this challenge, and I hope this research gives you inspiration and ideas to “rethink the disrupted world of work” in your own organization.


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HR TRANSFORMATION
HR Technology in 2018: Ten Disruptions Ahead

I’ve been an analyst following the HR Tech market for almost 20 years now, and this year things are changing faster than ever. In the report we just published, “HR Technology Disruptions for 2018,” I describe the details. In this article I’ll summarize the ten big changes going on.

1) A Massive shift from “automation” to “productivity.”

For many years the focus on HR technology was to automate and integrate HR practices. This meant online payroll, record-keeping, learning management, resume capture, interview and hiring, assessment, performance appraisals, compensation, management, resume capture, interview and hiring, assessment, performance appraisals, compensation, etc.

Well all that’s important, but it’s just “business as usual” now. A wide range of cloud-based HRMS and payroll vendors are now in the market, and you get very little credit for “automating” HR. (You do get penalized if you don’t of course). Our new High-Impact HR (HIHR) research shows that about 45% of companies are still focused on basic process automation, so I understand if this is still top on your list.

But beyond automation, as the HIHR article discusses, the big topic in business today is productivity. We are now working on agile, team-centric organizations, and we are overwhelmed with too much to do. Burnout, focus, and employee engagement are all issues, and we are now dealing with email, messaging from many different systems, and a plethora of communication tools that overwhelm most of us. Can we build HR software that really improves productivity and helps teams work better together? That’s the next challenge.

2) Acceleration of HRMS and HCM Cloud Solutions, But Not The Center Of Everything

In the last five years, cloud-based HR has become the rage. I could list more than two dozen highly successful vendors that offer HRMS, payroll, and many talent management services in the cloud. And in most cases they are offering financials and other ERP solutions as well. So the question for most companies is no longer “if” you go to the cloud, but rather “when” and “how.”

Well it’s harder than it looks. Despite these rapidly maturing solutions, only about 40% of companies today use cloud HCM solutions, and my experience with large companies is that the migration often takes 2-3 years or longer. (There is a lot of customized HR software out there.) So we are going to be “moving to the cloud” for a while yet, and the decision of which vendor to select looms large. In fact most companies ponder their vendor decision for months (or years), and feel the decision will have radical impact on their entire employee population.

Well despite strong marketing from the HCM companies, I believe this worry is misplaced. While the cloud HR and payroll system is a critical system for any business, it can be replaced. And the more important technology you buy (as I discuss in trend 1) is the talent and team management software. So your architecture looks more like a “set of services” all focused on making employees’ lives easier… not a single cloud vendor.

This topic will be the subject of another article, but let me just tease you with the slide below. This is what HCM architectures of today really look like. The most critical part might be that green layer in the middle, which we can probably call the “employee services” layer (which is looking more and more like chatbots every day).

Read more about this in the report, and stay tuned for more on this topic. My belief is that a new “breed” of HCM software is emerging, and as I describe above, I believe it looks more like “team management” and less like “talent management” every day.

3) Continuous Performance Management Is Here: And You Should Get With It

I wont belabor this topic (read “The Myth of the Bell Curve” for more), but the answer is now clear: continuous performance management is possible, it works, and it can transform your company. We are not talking about doing away with ratings, rather we are talking about building a new, ongoing process for goal setting, coaching, evaluation, and feedback.

The report discusses all the details (including vendors) but let me leave you with one big finding: despite the tremendous success of the cloud HCM vendors in the market, most do not have a total solution for this problem. So you are going to be buying new products to address this issue, and these new “team-centric” tools are likely to become the future leaders in the HCM market of the future.

4) Feedback, Engagement, and Analytics Tools Reign

Only a few years ago the engagement survey market was a robust but sleeply place. Today it has become a dynamic world of real-time survey systems, sentiment analysis software, organizational network analysis (ONA) tools, and products that actually automatically ask your peers for feedback to give you real-time coaching.

And open feedback tools are growing again, giving employees many new places to comment on the workplace. A new area of growth is the explosion of systems to offer pay transparency and are now crowdsourcing and providing benchmarking tools to help you “find your worth” (a phrase Glassdoor coined) through open feedback and benchmarking.

As I wrote about a few years ago in the article “Feedback is the Killer App,” I believe this explosion of transparency has been very healthy for business, and it has spawned a new set of pulse surveys, AI-based analysis and recommendation systems, and culture assessments throughout the marketplace. You can get this technology from startups, ERP vendors, talent management systems, and embedded in the new performance management systems. I think companies have to think about this as an overall architecture, but this is still a new world.

5) Reinvention of Corporate Learning Is Here

I’ve written about this extensively (read The 10 Disruptive Changes in Learning) but the simple message is this: a new breed of corporate learning tools has finally arrived, and companies are snapping them up quickly.

These include the “experience platforms,” a new breed of “micro-learning platforms,” modernized LMS systems, and new AI-based systems to recommend learning, find learning, and deliver learning. Virtual Reality-based learning is now alive and well, and I expect to see smarter and smarter technologies to help us find “just what we need” along the lines of performance support. And you can now buy systems that let employees publish and share content without any major effort on your part.

6) The Recruiting Market Is Thriving With Innovation

Recruitment is the largest marketplace in HR. Companies spend billions each year on recruiting and it has become an escalating war for employment brand, candidates, candidate experience, and strategic sourcing. High volume recruitment (hospitality, services, healthcare, retail) is being automated by chatbots and other new tools; skilled job recruitment is being revolutionized by open sourcing tools, more automated applicant tracking systems (now called recruitment management systems), and better assessments. And video assessment and culture assessment tools have matured so far that everyone can use them.

I find this part of HR technology the most dynamic and innovative, primarily because every major company has to buy a whole tapestry of tools to compete. I liken the recruitment technology market to the problem builders face in construction. You need an entire toolset of world-class machines to do the job, and each one has its own learning curve to use well. Recruiters are like the finished carpenters of the trade: they become better and better over time, and suddenly you find out your competition is stealing your people and you don’t know what hit you.

The market has gotten hotter than ever, with unemployment rate near record lows. We are back into the “war for talent” (a 15 year old phrase) and this time “the talent is leading the charge.” In other words, all the new technologies are making recruiters smarter about candidates, just as candidates are getting smarter about your companies.

Remember also that the old fashioned “job description” is really going the way of the dinosaur. More and more jobs are “hybrid” and rapidly changing, so the new world of tools has to help us find people with the right capabilities and learning skills, not just technical or cognitive abilities. And diversity is now a core part of recruiting, with new technology to help remove bias from job descriptions and reduce bias in interviewing (even VR can help with this). Lots to read about here.

7) The Wellbeing Market Is Exploding

I probably don’t need to mention that HR technology, content, and tools for wellbeing may likely be the next “big thing” in business. Not only do we need tools to improve productivity and reduce cognitive overload, but we also need “nudges” and data to help us exercise, stay mindful, and learn how to sleep and eat better. In the report I tried to describe some of the most innovative new solutions in the market. My experience with these vendors is that most of them are driving tremendous value for their customers, and the clients I talk with are seeing rapid adoption of these tools (especially among younger workers) and great improvements in engagement, health, and mental wellbeing.

At Deloitte, following the path of most companies, the wellbeing initiative moved from a focus on “health” to a focus on “reducing burnout” to a new focus on “human performance.” This is the journey most HR departments are going through and the vendor market is moving fast.

We have been doing research on “energy at work” and I think this concept may best encompass the new world of “engagement, productivity, and wellbeing” in one simple concept. These new tools can help us measure energy, figure out why and where energy is low, and give us individual nudges and tips on how to improve our energy. Lots to read about on that topic.

8) People Analytics Matures And Grows

We will soon launch our new maturity model on People Analytics and what you’ll see is a tremendous shift from companies “playing with models” to companies “seriously investing in infrastructure” to bring all their people data together. As I’ve discussed many times, employee-related data (and all the aspects it includes) is just as important or more important than customer data, because it tells you the secrets of how to manage your business better.

The marketplace is now rich with embedded solutions (nearly every HCM vendor has embedded analytics, many with prediction engines), and all the new vendors are starting to apply AI to their offerings. While this market has been very long in coming, the growth of cloud platforms is now making it explode, and it’s easier than ever to build a manager-level dashboard that helps your teams understand what they can do to make the work experience better.

At the corporate level, the ONA software market is now growing (organizational network analytics) so a new world of “relationship analytics” is taking hold. We can now look at core HRMS data (turnover, tenure, performance rating), relationship data (who you know, who you spend time with, what teams you are part of), wellbeing data (your activity, location, energy, wellbeing), and your sentiment data (feedback, mood, and sense of belonging). All this data is falling into the laps of HR departments and they are now staring to grapple with the issues of ethics, privacy, and becoming more transparent about what analytics they are doing.

There is a fundamental shift away from “PhD People Analytics Projects” to more business-oriented programs that help study sales performance, team performance, and other business critical issues. And as I discuss in the report, companies at Level 4 in our new model are delivering real-time dashboards to managers to make this all actionable. I personally see People Analytics as the lynchpin of success for HR in the next few years, as all these other technologies throw off data at an ever-increasing rate.

9) Intelligent Self-Service Tools

If you’re a software person like me, you have to ask the question: how do we bring all this “stuff” together into a seamless employee experience to make work better? Do we build apps? Do we upgrade our employee portal? Do we hope AI and conversational systems will sit on top of everything? It’s quite a complicated issue.

In today’s HR technology environment perhaps the most important new market is the fast-growing need for self-service, employee experience platforms. As I describe in the report, these are fast-changing systems that bring case management, document management, employee communications, and help-desk interactions into one integrated architecture. They sit between employee apps and back end applications, and they serve as the lifeblood of your employee service centers (which are going to be more automated every day).

And AI is coming fast. We had Diane Gherson the CHRO of IBM come to our research conference this Spring and she showed off a cognitive manager coach, a cognitive career coach, and a cognitive recruitment coach. Most of these tools are now becoming products to buy, and I’ve seen and talked with vendors that offer smart chatbots (focused on a single domain), intelligent agents, and amazingly fun games that make training, expense reporting, time tracking, and almost every other HR function easy. One vendor showed off a voice application which lets you query the system for vacation balance, performance tips, and even compliance training.

I think this is a huge new market, and I”m not even sure what to call it yet.

10) Innovation Within HR Itself

The tenth disruption I’ve written about is the incredibly rapid growth in innovation projects within HR teams. We, as HR professionals, are now becoming the disruptors. It used to be we waited for tech companies to invent things – then we figured out how to use them and bought them. Now HR departments are experimenting with new performance management models, new learning strategies, new ways to reduce bias, and new techniques to recruit and coach people. Then they go into the market and see if vendors are available. This shift to me is a disruption itself – forcing the HR technology community to move even faster than ever.

I encourage you to read the whole report, it was quite an effort to get it finished. This is a rapidly changing market and one in hypergrowth mode this year. I hope our research helps you make some sense of all these changes and I look forward to your feedback.


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HR TRANSFORMATION
7 Lessons Learned From The HR Business Partner Model

PART 1

(Written with Wayne Brockbank of the Ross School of Business at the University of Michigan.)

We have observed, studied, and shaped the business partner model through rigorous empirical research and extensive work within specific organizations. We have done 7 rounds of the HR Competency study which study the competencies of HR professionals and the capabilities of HR departments. The most recent (2016) data collection was a collaboration with 22 HR associations around the world and 32,000 respondents (see forthcoming book Victory Through Organization).  We have personally been involved in over 100 HR Transformations where we assess and advise how to be a better business partner. Based on these data, this essay reflects on what we have learned about the relevance of the business partner model.

Looking back: Seven lessons learned about business partner model

First, the business partner model is not unique to HR

All staff functions are trying to find ways to deliver more value to either top line growth and to bottom line profitability. Information systems, finance, legal, marketing, R&D, and HR are all under scrutiny and pressure to create greater value for their companies. This is especially true of transaction and administrative work that can be standardized, automated, re-engineered or outsourced. 

Second, the intent of the business partner model is focus more on deliverables (what the business requires to win) than doables (what HR activities occur).  

We have seen four phases of deliverables, moving from administrative efficiency to functional excellence to strategic HR to HR outside in (see book HR Outside In). Instead of measuring process (e.g. how many leaders received 40 hours of training), business partners move to measure results (e.g. the impact of the training on business performance), then move to how training build external value with customers and investors. For example, when HR builds better leadership capital, investors have more favorable images of the firm which shows up in market value (see Leadership Capital).  

Third, being a business partner may be achieved in many HR job categories.  

As business partners, corporate HR professionals define corporate wide initiatives, represent the company to external stakeholders, meet the unique demands of senior (and visible) leaders, leverage cross unit synergy, and govern the HR function. Embedded HR professionals work as HR generalists within organization units (business, function, or geographic). They collaborate with line leaders to help shape the business strategy, conduct organizational diagnoses to determine which capabilities are most critical, design and deliver HR practices to accomplish strategy. HR specialists work in centers of expertise where they provide insights on HR issues such as staffing, leadership development, rewards, communication, organization development, benefits, and so forth and they advise business leaders and HR professionals on how to turn insights into impact. HR professionals who work in service centers add value by building or managing technology-based e-HR systems, processing benefit claims and payrolls and answering employee queries. These individuals may work inside or outside the company. 

Fourth, HR professionals as business partners have unique information, insights, and recommendations to deliver competitive advantage. 

In formal and informal business discussions, each staff group brings unique insights to drive business results: finance talks about economic performance with information about revenues, costs, and financial returns; marketing discusses customers with recommendations on targeting key customers, customer response (e.g., net promoter score), and customer connection; operations makes recommendations and systems, quality, and supply chain. When HR partners in these strategy discussions, we propose that they provide insight, information, and recommendations on:

  • Talent. HR professionals are centrally involved in providing the right people with the right skills in the right job at the right time. Talent insights capture future competence as well as commitment and contribution. Upgrading the employee experience has been a long term important part of being a business partner (see Why of Work)
  • Leadership: HR professionals help prepare not just key individual leaders, but the collective leadership throughout the organization. They ensure that leaders have the knowledge, skills, and abilities to meet future demands and align with customer expectations (see Leadership Brand).
  • Organization capabilities. HR professionals partner with line managers to identify and create organization capabilities such as speed/agility, innovation, , risk, collaboration, information leverage, culture/shared mindset, accountability, and efficiency. These capabilities become the identity and personality of the organization.  

As business partners, HR professionals provide analytics, insights, and recommendations on talent, leadership, and capability to deliver business results and to serve all stakeholders. 

Fifth, as talent, leadership, and capability issues increase in business relevance, HR professionals may help respond by being both architects and anthropologists. 

As architects, HR professionals design, blueprint, and facilitate investments in talent, leadership, and capability. As architects, HR brings what is called structured information where the information is in a spread sheet which allows for traditional quantitative statistical analyses to find trends. As anthropologists , HR professionals increasingly look beyond the borders of the organization to identify what external stakeholders (customers, investors, communities, regulators) and what business trends (social, technological, economic, political, environmental, and demographic) will shape future business success.  In this case, HR often sources unstructured data where they use qualitative insights to anticipate trends.  

Sixth, as with almost any change, we have seen an inevitable 20-60-20 pattern for HR professionals to fully adopt the business partner opportunities. 

Twenty percent of HR professionals get it, do it, and act as business partners. Twenty percent will unlikely ever get there for a host of reasons (e.g., personal inability, lack of desire or organizational lack of support) and 60% are learning and moving in the right direction.  While we see the HR profession moving in the right direction, some may never make it. Sometimes, critics of HR like to focus on the lingering 20% laggards and claim that HR professionals have not improved. This is as inaccurate as focusing on the 20% innovators and claiming HR has fully arrived. The business partner model is empirically supported and more of the 60% are making positive progress. A decade ago there was a clamor to “get to the table” and to become part of the business. Today, most effective HR professionals are already at the table and they need to be clear about how their insights on talent, leadership, and capability will deliver business results.

Seventh, being a business partner requires HR professionals to have new knowledge and skills. 

There are many efforts to determine the competencies for effective HR professionals. Through the University of Michigan, the RBL Group, and partners throughout the world, we have spent 30 years studying (theory, research and practice) how competencies for effective HR professionals drive personal effectiveness, stakeholder results, and business performance (which will be reported in books, articles, and posts).  

In Summary

HR professionals must evolve into being the best thinkers in the company about the human and organization side of the business. The nature of business is dramatically changing. Changes are occurring in virtually every element of the social, political, and economic environments that impact business. Under such conditions, the human side of the business emerges as a key source of competitive advantage. Therefore, HR specialists in the logic, research, and processes of human and organization optimization become central to business success.

Many HR professionals are doing exceptional HR work. From ING in Hong Kong, to ICICI and TATA in India, to ADIA in the United Arab Emirates, to MTN in South Africa, to DHL and BAE Systems in the UK, to Arcos Dorados and América Movil in Latin America, and to Walgreens, Intel, and GE in the United States and in thousands of other companies around the world, HR professionals are making enormous progress towards delivering value as business partners. In the next article post, we will look at the future of the HR business partner model.

PART 2: 5 FUTURE PROSPECTS FOR THE HR BUSINESS PARTNER MODEL

(Written with Wayne Brockbank of the Ross School of Business at the University of Michigan.)

The business partner model has been instrumental for creating value for many staff functions, including HR. In another article, we summarized some of the lessons learned; in this article, we offer future perspectives on where the ideas may evolve.

As we look forward, there are many excellent thinkers who continue to examine how HR professionals can deliver value to the business. With their input, the business partner model continues to evolve. Many of the critics of the model look at today’s problems through yesterday’s solutions and wonder why they don’t get solved. This is like trying to run today’s software on yesterday’s computers. Of course, it won’t work. The HR business partner model in the 1990’s has changed in recent years to adapt to today’s business challenges. We are comfortable projecting five trends that will continue to evolve the HR field and how it delivers value to business.

First, HR will deliver value to multiple stakeholders. 

Over the last thirty years, we have both anecdotally and empirically seen steady progress in the HR field as it has moved toward greater strategic understanding and relevance. We anticipate that this progress will continue. HR professionals will continue to deliver value inside an organization by helping employees find meaning and well-being from work (sometimes called employee experience or re-humanizing HR) and organization results by being a central component of strategy formulation and implementation. HR insights make the right strategy happen.

But, moving beyond an internal focus, our recent research shows that when HR departments and professionals focus on external as well as internal stakeholders, business performance improves. We call this focusing HR from the outside/in, not looking at strategy as a mirror which reflects HR practices, but as a window to the outside world. Customer focused HR shifts from focusing on being the employer of choice, to becoming the employer of choice of employees our customers would choose.  Likewise, customers can participate in the design, deliver, and participation in training, 360’s can become 720’s, standards can be set with customer involvement. Culture can be defined less as internal patterns of work (values, beliefs, behaviors, and norms) and more as an identity of the firm in the mind of key customers made real to employees.

Companies that are able to create credible leadership capital are more likely to enjoy price earning ratios above that of their competitors. 

Investor focused HR accesses the requirements of capital markets. The recent burgeoning research in finance and economics on “intangible assets” is emphasizing the increasing importance of human capital assets and HR practices that create and sustain those assets. Empirical evidence has clearly shown the investment community is learning to account for practices such as succession planning, leadership development, setting and meeting performance targets, corporate culture, and executive compensation as considerations in buy or sell decisions. Companies that are able to create credible leadership capital are more likely to enjoy price earning ratios above that of their competitors. As business partners, effective HR professionals play a central role in defining, creating, and sustain leadership capital that is valued by investors. 

Second, HR valued outcomes will move beyond talent to organization and leadership. 

In our recent research, we found that the quality of an HR organization or department had 4 times the impact on business performance as the quality of the HR professionals. Generalizing from this research, talent matters and it is important to fight the war for talent. But organization matters much more and to win the war requires more capable organizations. Shifting the focus from individual competencies to organization capabilities broadens HR outcomes. In addition to delivering talent, HR work will deliver capabilities like speed/agility, information/analytics, collaboration, the right culture, innovation, and so forth. When HR delivers individual talent, organization capabilities, and leadership, internal and external stakeholders get more value from HR. This requires HR business partners with broader business skills.

Third, HR will become more technologically efficient. 

The routine work of HR must still be done, and done well. Digitization of HR has arrived and newly emerging technologies will continue to be applied to improve the efficiency of HR administrative work such as payroll, benefits administration, entry level staffing and employee record keeping. But HR technology will move from efficiency, to innovation, to information, to connection (see my article on doing an HR technology audit). 

Fourth, to be business partners, HR professionals will have to master the right competencies.

In the most recent round of our competency research with over 32,000 global respondents, we found nine competencies. Figure 1 (below) portrays the nine competencies we identified for HR professionals. Each of these HR competencies are important for the performance of HR professionals.[1] To get invited to business discussions, HR professionals need to be credible activists who influence through relationships of trust. To serve customers and investors, HR professionals need to be strategic positioners who understand business context and can think and act from the outside-in. To deliver business value, HR professionals need to be paradox navigators who effectively manage the inherent tensions in the business.

[1] The authors have available statistics on these 9 competence domains by gender, geography, respondents, time in HR, and other demographics.  

Figure 1: 2016 HR Competency Model: Round 7

Fifth, HR will be a source of both structured and unstructured information to improve business impact.

HR analytics is ultimately about providing information to improve the business. We have shown four levels of information: scorecards to insights to intervention to impact. As HR moves to analytics-driving business impact, they will need to source all kinds of information. Structured information occurs in spreadsheets with traditional statistics representing about 20% of information that can be used for business impact. Unstructured information that comes from observations, intuition, and other insights comes from HR professionals being anthropologists more than statisticians and represents about 80% of impactful information. As HR shifts information and analytics to deliver business impact (phase 4), HR professionals need to access both structured and unstructured information.

The Way Forward For HR Business Partner 

In the future, HR business partners will continue to morph. The bar has been raised on HR and some HR professionals will make the grade and others will not. There are emerging business issues where HR can and will contribute value. The future for HR is filled with both challenges and opportunities. As we look to the future, HR professionals as business partners will continue to deliver value and help businesses manage the enormously difficult and exciting challenges ahead.


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Here’s What HR Must Do to Have the Business Impact CEO's Want

A survey released early this year of global CEOs and board chairmen was conducted by the prestigious Conference Board, and it concluded once again that human capital is the top challenge they face. While some in talent management and HR might feel honored to be at the top of the CEO’s watch list, they should instead view this listing as a failure, because they have been at the top of the challenges list two years in a row.

This means to me that we in HR haven’t done enough to eliminate the uncertainty and the lack of confidence that comes with being labeled “a challenge.” The other top five issues including customer service, operational excellence, and innovation all require well-managed talent in order to be successful.

In my experience, if human capital is to move from the “challenge” list to the “problem-solved” list, we need to move away from our soft, longstanding reliance on building relationships and instead begin the transition to a high-impact business function. A high business-impact HR is where we focus on directly impacting corporate strategic goals like revenue, innovation, and customer service.

And yes, I acknowledge that the soft, relationship-building approach of talent leaders might have been OK in the past. However, it’s now simply not possible for any strategic function to continually improve and innovate without shifting to a businesslike, hard data-based management approach. Executives have in the past been satisfied with what HR has historically provided, but that was mostly because executives were simply not aware that there was a second, more businesslike approach to talent management.

Unfortunately I don’t see HR making that transition as long as we get away with these low expectations from CEOs. So my suggestion is that we challenge our CEOs to demand much more from HR.

HR is a high impact function

You shouldn’t need a survey to realize the importance of talent to a business. Even Jack Welch has stated that HR should be “the most important department of a company.”

We have a high impact for a variety of reasons. The first is cost, because employee and HR costs are often the largest single corporate variable cost item (as much as 60% of all corporate variable costs). Second, the talent function has a further major impact because all ideas and innovations come from well-managed employees. And obviously you can’t have great customer service and smooth operations and production without an excellent workforce.

The 8 action steps for becoming high impact

Once you decide to make the change to this higher business-impact approach, the next step is to identify the specific strategic areas within HR that must become more businesslike. Those areas are highlighted below:

1. Accept accountability for improving people-management results — Talent leaders frequently complain that they shouldn’t be held accountable for people-management results because so many people decisions are made by managers. I find that argument to be spurious because most other business functions like finance, planning, and IT also share responsibilities and decisions with numerous managers. The critical thing to remember is that talent management designs and manages all talent processes, so they are in my view “the default owner.”

We also know that individual operating managers routinely refuse to take accountability for talent decisions, so that leaves talent leaders to accept the “captain of the ship” role. Executives should demand that talent leaders accept accountability for such critical areas as hiring and retaining top talent, for increasing productivity and innovation, for developing and moving talent internally, and for providing rewards in such a manner that they stimulate employee productivity. It’s time to stop shifting the blame and to accept accountability for excellence in talent management, even when we don’t have total control over it.

2. Demand a shift to data-based decision-making — Strategic decision-makers need to demand that talent management shift from its traditional “gut” decision-making to the widely accepted business practice of making all important people-management decisions based on data. That includes using data to identify the most effective hiring criteria, to identify the factors that cause employee turnover, and using data to identify the barriers that decrease productivity and innovation.

An example of database decision-making might focus on performance management. In this area, it is quite common for talent leaders to assume that progressive discipline, coupled with additional training and counseling, will turn a subpar “D level” performing employee into an above-average performer. If you shifted to a metric-driven approach, you would require your performance management person to begin tracking metrics like how long it takes to improve, how much money it costs to improve, and what percentage of these “D players” ever become “A” players.

One final metric area that you should expect your talent leaders to begin developing is predictive metrics. Rather than relying exclusively on historical metrics which tell you what happened last year, these predictive metrics will instead alert you to talent problems and opportunities that will likely occur in the immediate future so that you have sufficient time to act. And add to your predictive metrics your recommended prescriptive actions, so that managers will know what to do to solve their problems. 

3. Measure and increase workforce productivity — Even though measuring and reporting on the productivity of the workforce seems like a basic task, few talent management teams actually calculate or report it. In fact, when you ask talent management professionals who is responsible for measuring and increasing workforce productivity, typically no one will say it’s their role. The most widely accepted measure of talent management effectiveness is known as “workforce productivity,” which is revealed by the average revenue per employee. The two key components required for this calculation, revenue and the number of employees, are usually easily obtained from public data or alternatively, the metric is already calculated on websites like MarketWatch and Hoover’s.

Another more powerful but harder to calculate indication of workforce productivity is revenue per labor dollar spent. This is calculated by dividing your total labor costs into the company’s revenue. 

4. Make managers accountable for great people management — Less than 40% of talent leaders make excellent people management part of the promotion criteria and bonus formula for managers. But since “whatever you measure and reward gets done,” strategic decision-makers must insist that the people management metrics and rewards are large enough to get managers to change their behavior.

Incidentally, only hire managers who are clearly A players. This is because B-level managers have a tendency to protect their job security by hiring C-level employees who won’t challenge their methods or threaten their job security.

5. Build a competitive advantage — Almost every product, business unit, or process views itself as operating in a competitive environment. Unfortunately, talent management all too often considers itself exempt from taking an external perspective, under which it would conduct a competitive analysis and adopt talent-management approaches that would provide the firm with an external competitive advantage.

Under the new approach, talent management would be required to monitor the talent results and the approaches of major talent competitors, in order to ensure that “what we do” in talent is better in every important area than “what they do.” Check with your talent leaders and don’t be surprised to find that they do not conduct side-by-side comparisons between your company and its talent competitors. In a similar light, talent management often fails to capture enough competitive intelligence information on the talent practices of competitor firms.

6. Expect reporting on continuous improvement — Every business function monitors its programs and consequently reports the percentage that they improve each quarter and year. Unfortunately, talent management has frequently failed to measure and report its percentage of annual improvement. At the very least, talent leaders should expect continuous improvement in the quality of hire, workforce productivity, the turnover rate of top performers, the rate of innovation, and the learning and operational speed of the organization. 

7. Measure quality and error rates in people management programs — Talent professionals generally focus on volume and cost, but they routinely under measure and underreport metrics that reveal quality. You should insist that talent leaders implement at least a limited version of Six Sigma quality in the areas of hiring, retention, training, and performance management. Also demand that they conduct a “failure analysis” every time there is a major talent management program or process failure. Some data suggest that hiring has as much as a 46% failure rate, so an error rate that is potentially that high needs to be measured and reported. 

8. Calculate your ROI — Almost every department and program is expected to produce a positive ROI. However, talent leaders routinely make no attempt to calculate or report the talent function’s overall ROI. And in the rare cases when talent leaders do attempt to calculate ROI, they only focus on the cost side, completely ignoring the other side of the equation that covers the business impacts of your investment in talent. When operated correctly, HR should have a higher ROI than finance, operations, and even production.

Final thoughts

Once you begin making this transition to a data-driven high business impact HR, you shouldn’t be surprised when you find that members of your own HR team are not capable or even interested in shifting to this model. If you don’t have the courage to release them, you should at least put these resistors in administrative roles within HR. I also suggest working with supply chain and the CFO’s office to better understand how to increase and quantify the business impacts of HR.


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How HR Business Partners Can Become Data Driven - 4 Playbooks To Help You

When it comes to data driven HR (DDHR), HR Business Partners (HRBPs) must:

  • Focus on what's relevant to the business
  • Develop their personal skills & competencies
  • Adopt a capability mindset
  • Ensure DDHR is not just a one-off project

I also believe the data driven ability for an organization’s HRBP team acts as either a limiter or enabler of success & credibility for HR. Sadly, this is a universal challenge.

It’s this realization that motivated me to write a practical guide for HR Business Partners to become data driven. These guides, or Playbooks, have been developed with one purpose - to help build the capability for data driven HR in businesses.

Before we go any further, if you’d like a pdf copy of these 4 Playbooks - give me a thumbs up, tweet, share or make a comment on this LinkedIn Article - and then use the Download Link to get the full 100+ page PDF.

The Playbooks are based solely on my first-hand experience as a consultant, a business partner to many technology organizations, an entrepreneur across a few different businesses - one of which was focused on helping organizations build sustainable change programs - and finally, as an all-in participant in the emerging field of people analytics.

It may not meet everyone’s expectations. It's long. Too detailed in places. Not so much in others - but it is a start because I truly feel that the success of people analytics at-large is constrained by the ability of HR Business Partners to use their HR, talent and productivity data to drive better business outcomes.

I've designed it in 4 sections because I believe that the strong ability of one (or a small group) of data- & business-savvy HRBP(s), while directionally correct and stoic, is not sustainable.

That’s why organizations need to build a comprehensive capability - to plan, fund, engrain, lead, test, improve and unlock the potential that’s trapped within their people data - across the board.

These Playbooks will help you do that. Select and implement the components that work for you.

Overall, my hope is that leading organizations will see the light and chase this largely untapped opportunity - with or without any help from this Playbook.

Here’s an overview of the 4 Playbooks.

Playbook 1: HR & HRBPs must focus more attention on what's relevant to the business

When it comes to the People Plan, Ops will always have different objectives, drivers and issues than Sales - but there will also be common ground. Therefore, it is imperative that HRBPs have solid understanding of both corporate/ enterprise-wide people objectives, in addition to the specific objectives of the business units they serve.

Playbook 2: HR & HRBPs must develop analytical and consultative competencies

It must be recognized and addressed that some HRBPs are more naturally analytical, business-savvy, data-driven and strategic than others. It's therefore becoming more commonplace that HRBPs build upon their transactional HR skills & experience, becoming change enablers and helping drive the people-side of business outcomes. This means articulating the opportunity and understanding the issue, consulting, driving decisions, planning & implementing change, and optimizing results.

Playbook 3: HR & HRBPs must adopt a capability mindset - which goes beyond slick tools

Slick tools can flounder if they don't live within an environment - or capability - which supports their purpose. For an HRBP to be successful in Data Driven HR, there must be a framework, strategic focus and processes in place to ensure the relevant data is both captured and trusted, clarity in the role of the HRBP, and of course, visibility, realization and optimization of hard business results.

Playbook 4: HR & HRBPs must implement data driven decision-making in a sustainable way

"Becoming Data Driven" implies change will occur - and this change must be sustainable and not just a one-off project. These 4 Areas of Focus must work in concert with one-another to ensure clarity of purpose, adoption and motivation for the future state, leadership support, a concrete plan for implementation, in addition to clearly defined, yet achievable success.

So, if you want the Playbook:

Share, Tweet, Comment or Like this LinkedIn Article

Download using this Link Follow this link: Get-Data-Driven-HR-Playbooks

it’s as simple as that.



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HR TRANSFORMATION
How High-Performing HR Organizations Use Technology—And What You Can Learn From Them

Mercer’s 2017 HR Transformation Study – How HR Needs to Change revealed some interesting truths about HR and technology. We learned that organizations with high-performing and strategic HR functions have embraced technology and are constantly looking for ways to move that needle forward.

Of particular note, these organizations usually invest in an optimal mix of HCM technologies and use them to extract key metrics that can drive strategic business priorities through people, while delivering a customized consumer-level value proposition and an engaging experience for both leaders and employees. 

We believe that investing in human resources management technologies should be a top priority on any organization’s strategic talent agenda. And here’s why:

According to our study, organizations who have made technology a priority:

  • Achieve better business outcomes, such as delivering exceptional customer value (94%). 
  • React proactively to disruptive change (83%) 
  • Drive innovation (89%)

They are also viewed as great places to work (86%) and attract the talent needed to excel (91%).

Despite these statistics, however, it seems not all HR functions are on board. In fact, our survey found that only one-third (35%) of CEOs believe their HR function provides (or is strategically invested in providing) a digital experience for employees. And even though organizations with high-performing HR functions use technology more than others, it’s still relatively limited. While 69% have employee self-service in place, only 36% have managerial self-service, and only 27% have mobile talent applications.

The good news though is that our findings indicate that almost all organizations plan to do something about their limited HR technology capabilities: 

  • 57% plan to address HCM/HRIS deficiencies 
  • 58% plan to improve the delivery of transactional services in the next 18 months

What is the return on investment for organizations implementing HR technology solutions?

Many organizations identify ROIs, which include the single central repository for all HR data, the ability to provide consistent reliable reporting, and anticipated benefits of workforce analytics capabilities that drive effective decision-making through predictive rather than historical analyses. And while these are all important elements driving the business case for change, there are so much more from a process, structure, and capability standpoint that cannot be understated.

One of the biggest challenges that prevent HR from assuming a strategic role within organizations is time. Too many HR professionals are spending the majority of their time on non-value added activities that could easily be automated – and this automation would enable HR resources to be redeployed to more strategic aspects of the business such as workforce planning, succession planning, and building leadership capability. Through our work with clients and our research, we have consistently found that high-performing HR functions that prioritize technology and leverage it to optimize their activities are better able to add true value to the business. To that end, investing in technology drives efficiencies resulting in HR having the time to strengthen decision making, truly partner with business leaders, and provide a more customized and engaging experience to the multi-generations in the workforce.

So what are we waiting for? Let’s invest and prove that the benefits far outweigh the costs. At Mercer, we believe the investment will be worth every penny.